Liabilities of Corporation Managers in German Law

MARTIN E. ABDALA

Insol International Electronic Newsletter

Insol International

Lugar: Londres; Año: 2011 vol. 1 p. 1 - 10

1099-1107

1. The liability of corporate managers has been for a long time a subject of great importance, that’s been detected in early ages by the German law. 2. The liability imposed on corporate managers is based on the non-observance of a generic obligation of conduct that’s been on German Law for over a hundred years: i.e. to behave with the care and the diligence of a good businessman 3. Even if the formula remained the same since it’s early institution, it has changed the meaning given to it, increasing greatly the number of duties that the corporation’s managers must observe. 4. Because of the great amount of obligations, now imposed there is a severe liability regime for corporation’s managers, but in fact there are some exceptions to that severity statement, such as the Business Judgment rule, that states that corporation’s managers are not liable for damages caused by their decisions that ended up being unfortunate. 5. Agreements to limit or reduce liability celebrated between management and the same companies they lead and D & O Insurances are also used lately with much more frequency to monitor that liability regime. 6. Finally the most important exception to the severe regime is the little use of this type of liabilities action, mainly because in German law there’s a lack in legislation about the person capable of suing.